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State running out of money for construction

Last Modified: Thursday, January 31, 2013 6:35 PM

BATON ROUGE (AP) — The state's pool of money to pay for ongoing construction projects is running dry, and Louisiana is teetering
so close to its debt ceiling that there's little room to borrow more to replenish the fund, officials said Thursday.

Without a new infusion of cash, Louisiana is
projected to run out of money to pay for college building repairs,
economic development
projects and state-funded road work in about four months, said
Whit Kling, director of the State Bond Commission that oversees
construction borrowing and state debt calculations.

State senators heard the troubling news of
the latest money problem in a briefing about Louisiana's finances by
Sherry Phillips-Hymel,
the chamber's chief budget analyst. She told senators that the
capital outlay fund is "very, very low."

"The fund is broke. The fund does not have sufficient cash resources, and without a change in the legislative statute, there's
no way to issue additional bonds," Kling, who watched the Senate briefing, said after the meeting.

The state can borrow money to pay for
construction projects through bond sales to investors, with the debt
paid off with interest
over several years. But Louisiana has a constitutional limit on
debt, and the state is $22 million from hitting its $605 million
debt ceiling, Phillips-Hymel told senators.

Kling said that leaves the state little capacity to issue new bonds to replenish the construction fund. He said the state
could borrow enough money to cover about four additional months of construction work before hitting the debt cap.

Among the options available, lawmakers in the upcoming regular session could seek to exclude certain types of debt from the
calculation of the cap, change the limit or vote to breach the ceiling. Phillips-Hymel said each proposal would require a
hefty two-thirds vote.

A limit enacted in the early 1990s requires that the state's annual debt-repayment requirements fall under 6 percent of the
state's yearly income from taxes, licenses and fees. The state has never exceeded the limit, and Kling said lawmakers have
never voted to spend above the cap.

A spokesman for Gov. Bobby Jindal's Division
of Administration wouldn't say Thursday what the Republican governor
will recommend
to keep the dollars for construction work from running out. But
Michael DiResto said the administration won't seek a legislative
vote to breach the debt cap.

"We will live within our means and we will
look for opportunities to achieve savings so that capital outlay
projects can continue
to move forward," DiResto said in a statement.

He also blamed the treasurer's office for offering past inaccurate guidance on borrowing limits.

"It's important to note that the treasurer's office previously advised that the state had more money to borrow than was actually
available. They have recently corrected their calculations," DiResto said.